Russia reins in bioethanol plans as tax reforms drag

Russian companies have abandoned costly projects to produce bioethanol from grain and are instead trying to make the environmentally friendly fuel component from other sources, such as timber waste and straw. The shift is due to a lack of support for bioethanol made from grain in the country. Aside from a widespread belief that use of grain would lead to a shortage, there is also a Russian scheme that applies an excise tax of 27.7 rubles (US$0.83) per kilogram of gasoline containing 1.5% of ethanol, which rises to 191 rubles (US$5.72) if the ethanol content rises to 10%. Companies such as the Titan Group have tried to avoid payment of the tax by producing gasoline with a bioethanol-based component, Ethyl Tertiary Butyl Ether (ETBE), and exporting the gasoline itself. Titan has started producing bioethanol in its Biocomplex, which is initially set to produce 150,000 tons per year, in the western Siberian region of Omsk, while NPK Ekologia has two bioethanol facilities on the drawing board: a 250,000 ton per year project in the central region of Tambov and a 200,000 ton facility in Nevinnomyssk, in the southern Russian region of Stavropol. (April 16, 2009)